This grant aims toward an understanding of the events involved in lineage determination as pluripotent cells commit to hematopoietic and endothelial fates. This knowledge is fundamental to the development of regenerative medicine based on embryonic stem (ES) cells for the treatment of diseases of hematologic and endothelial origin. Our current model postulates that the hematopoietic and endothelial lineages arise in mesoderm from a common bipotent progenitor - the hemangioblast. Although an in vitro assay exists for the hemangioblast, very little is known about what enables some mesodermal cells to adopt this fate while others do not, and how the hemangioblast progeny select between endothelial or hematopoietic fates. In our search for hemangioblast regulatory molecules, we have discovered that endoglin (eng), an ancillary receptor for several members of the TGF-beta superfamily, plays a critical role in hemangioblast specification. Our preliminary studies using ES cells differentiated in vitro demonstrate a profound reduction in hemangioblast frequency in the absence of endoglin. Furthermore, we show that endoglin marks the hemangioblast on day 3 of embryoid body (EB) differentiation. To date the only cell surface antigen known to mark the hemangioblast is Flk-1. Our pilot results point to a role for endoglin in hemangioblast specification as well as provide evidence that endoglin is required for hematopoietic commitment but not endothelial. In this study, we propose to dissect the mechanisms by which endoglin regulates hemangioblast specification as well as to understand its role in hematopoietic and endothelial commitment. In Aim 1, we propose to use inducible gene expression to probe the function of endoglin in temporally defined windows to evaluate its role in promoting hemangioblast specification, and hematopoietic or endothelial lineage selection. To elucidate the mechanism associated with endoglin's function in hemangioblast development, in Aim 2, we will investigate biochemically the cascade of components associated with TGF-beta signaling, including Smads and upstream receptors, in cell fractions highly enriched for hemangioblast precursors isolated from eng -/- as well as endoglin overexpressing and control cells from day 3 EBs. These results will be complemented genetically by rescuing the eng -/- phenotype with appropriate activated proteins. In Aim 3, we will validate our in vitro results by studying the role of endoglin in vivo. We hypothesize that the anemia observed in eng -/- embryos is not a secondary effect due to reduced blood flow but a result of defective erythropoiesis, which is associated with improper hemangioblast development.